On 8/13/07, "David B. Shemano" <[EMAIL PROTECTED]> said:
> Jim Devine writes: > >> question: what happens if the borrower _just >> can't pay_? If the borrower owes $100k but >> does not have the resources. are his or her >> wages garnisheed? > > To simplify: > > * * * in California, unless lender actually > files a lawsuit against the borrower (judicial > foreclosure), . . . . . . as more and more mortgage lenders appear to be beginning to do unlike their reliance in the past and to date on non-judicial foreclosure in that state . . . > . . . lender cannot sue the Debtor for the deficiency > if the foreclosure proceeds are less than the loan > balance . . . . . . as, meanwhile, the "in California" qualification (though accurate) may be inadvertently misleading if the reader were (mistakenly) to infer that what has so far more or less generally pertained in Calif. applies and will apply in other states where deficiency judgments commonly are granted and probably will be increasingly sought as mortgage loan defaults continue. > The deficiency is essentially written off > and discharged. The only consequence for > the Debtor is a bad credit rating. * * * As noted, it is questionable whether this will continue predominantly to be so in Calif., at least with respect to borrowers/debtors who have other assets not exempt from the enforcement of money judgments and who are employed and may not be eligible for Ch. 7 bankruptcy relief. > If Debtor . . . . . . who still is eligible to do so . . . > . . . filed chapter 7, a trustee liquidates all non-exempt > assets and distributes to creditors, and all debts > (including the [personal liability on a not fraudulently > obtained mortgage] . . ) are discharged, so all future > assets and wages are free of old creditor claims . . . . . . . if the Ch. 7 petitioning debtor is granted a discharge despite the provisions of the new bankruptcy law that make obtaining such relief comparatively much more difficult than in the past as, meanwhile, and as Mr. Shemano noted elsewhere, correctly, the availability of Ch. 13 relief, which requires a debt repayment plan, has been also substantially limited/tightened insofar as mortgage loan obligations are concerned.
